Mary Daly, president of the Federal Reserve Bank of San Francisco, spoke at the National Association of Business Economics (NABE) economic policy conference in Washington, DC, on February 16, 2024, announcing potential interest rate cuts by the end of the year, without specifying the timing or size of such measures.
Daly indicated that improvements in inflation metrics and a notable slowdown in hiring could prompt the Federal Reserve to adjust monetary policy. “There will be some policy adjustments that need to be made in the next quarter. How much and when they are needed, I think, will depend very much on the information that comes in,” he said at a forum in Hawaii. “But from my perspective, we have now confirmed that the labor market is slowing, and it is extremely important that we do not let it slow so much that it becomes a recession.”
His remarks coincided with Wall Street experiencing its steepest decline in nearly two years, driven by investor concerns about slowing economic growth and the Federal Reserve’s response. Although Fed officials hinted at potential rate cuts at last week’s meeting, they provided few details.
Concerns intensified over the next two days, with weak reports on layoffs, production and job creation, fueling fears that the Fed might be moving too slowly.
Daly, a voting member of the Federal Open Market Committee (FOMC), reassured that policymakers are committed to their dual mandates of price stability and full employment. “We will do what is necessary to ensure that both of our objectives, price stability and full employment, are met,” he stressed. “We will make policy adjustments as the economy provides the data and we know what is needed.”
Echoing that sentiment, Chicago Fed President Austan Goolsbee told CNBC that the current “tight” interest rate stance is unjustified unless the economy is overheating, which he said it is not. Goolsbee assured that the Fed would promptly address any emerging economic problems.
